Predetermined factory overhead rate

Novello Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be:

Disposable supplies		$316,100
Depreciation expense		94,100
Utilities		52,400
Nurse salaries		378,400
Technician wages		251,000
Total operating room overhead		$1,092,000

The overhead costs will be assigned to procedures based on the number of surgical room hours. Novello Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

1. Compute the estimated number of operating room hours for the year.

   fill in the blank 2 hours

2. Determine the predetermined operating room overhead rate for the year. Round your answer to the nearest dollar.

   $fill in the blank 3 per hour

3. Conrad Goldsmith had a five-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (b)? Round your answer to the nearest dollar.

   $fill in the blank 4

4. During January, the operating room was used 240 hours. The actual overhead costs incurred for January were $81,200. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. Round your answer to the nearest dollar.

   $fill in the blank 5